Shippers ready to “bear the brunt” of higher trucking rates as ELD implementation set to begin Dec.

The tightest truckload market in at least four years will be further exacerbated by the long-awaited mandate next month that trucks are outfitted with electronic logging devices which the government says will crack down on drivers working excess hours behind the wheel.

By ·

The tightest truckload market in at least four years will be further exacerbated by the long-awaited mandate next month that trucks are outfitted with electronic logging devices (ELD) which the government says will crack down on drivers working excess hours behind the wheel.

“There are two components to this,” Mark Rourke, executive vice president and COO of Schneider National, the nation’s second-largest TL carrier, said. “One is how well will people adapt? When you go from paper to electronic (logs), your business model changes. The second component is how many (independent) drivers change? How many participants leave the market place?”

Most truckload executives and brokers say the productivity hit on ELDs will be in the 4-to-7 percent ranges. Most of the larger TL carriers—the J.B. Hunts, Werners, Schneider’s of the world—have long ago implemented their mega fleets with the devices which they say aid in productivity, route management, billing and other planning areas.

 “The impact will be on those carriers with 10 or fewer trucks,” said Transplace CEO Tom Sanderson. Approximately 90 percent of the trucking industry is comprised of fleets with 10 or fewer trucks, according to American Trucking Associations.

They are life blood of truck brokers,” Sanderson said of smaller carriers. “(If they’re not in compliance), that could exacerbate the spot market further.”

That could affect truck brokers because it will make it harder for them to cover freight. But at same time, shipper will be paying more in higher rates. “So from a financial standpoint, I think brokers will work out quite well in tight market. In end of day, it’s shippers who bear the brunt of increased prices—not the broker.”

Implementation is set to begin Dec. 18. At the beginning, it will be in two phases – fines starting in mid-December, then violators placed out of service starting next April 1. That is unless a last-second Hail Mary congressional objection is upheld.

The Owner-Operator Independent Drivers Association is one of 31 organizations in the coalition asking to delay the rule for two years. Industries represented include agriculture, pyrotechnics, utility contractors, livestock and several others that say they will be negatively affected by the mandate.

“The electronic logging device mandate is written so broadly that it has far reaching implications well beyond the traditional trucking industry,” said Todd Spencer, executive vice president of OOIDA.

The group supports a bill proposed by U.S. Rep. Brian Babin, R-Texas, that would delay the ELD mandate for two years. Babin’s bill, H.R. 3282, the ELD Extension Act of 2017, would postpone the current implementation date until December 2019.

The coalition says the mandate should be delayed until the Federal Motor Carrier Safety Administration addresses numerous unresolved issues identified by impacted stakeholders.

OOIDA says there are “significant technological and real-world concerns” that have not been addressed by FMCSA. Among these concerns cited by OOIDA were a lack of certification of devices, connectivity problems in remote areas of the country, cybersecurity vulnerabilities, and the ability of law enforcement to access data.

But Lane Kidd, managing director of the Trucking Alliance, which has pushed for ELDs for at least the past six years, said ELDs, will “unquestionably reduce truck driver fatigue” and aid highway safety.

ELDs will reduce large truck accidents on our nation’s highways,” Kidd said. “ELDs will make it easier for law enforcement to verify how many hours a driver has been behind the wheel. Further, Congress has voted numerous times to require ELDs.

“The federal courts have upheld their congressional action,” Kidd added. “Yet OOIDA and other groups continue to ignore these facts, suggesting the rule may not happen, and are now taking their members perilously close to having their trucks taken out of service for not installing them.”

Some major truck brokers say the advent of ELDs will just place a further premium on brokerage services able to secure capacity in a tight market.

“Anytime there is change or disruption in the market it creates opp. and challenges for companies like us,” Jeff Tucker, president of Tucker Company Worldwide, told LM. “It comes down to what are your relationships with your carriers? This can be a tremendous opportunity for brokers.”

Tucker advised shippers to develop strong relationships with core group of carriers and truck brokers to get through tight markets such as this. “Some shippers have a flawed network and only think of brokers as a safety net. They should have a relative handful of trusted brokers along with core TL carriers to more easily weather storms like this.”

Tucker noted that less than 1 percent of TL carriers have more than 500 trucks. “If the 1 percent gets tight and you don’t have 4-6 brokers in your core program, they you’re going to be paying through the nose for capacity when the ELD mandate takes effect,” he said.

About the Author

John D. Schulz
John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. John is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis.

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

ELD · Trucking · All Topics
Latest Whitepaper
Intelligent Vision-based Sortation & Tracking Systems
Download this new "Making the Case" guide to learn how using intelligent, vision-based readers and sensors can capture the information you need to help address both external customer service expectations, and internal marching orders for efficiency.
Download Today!
From the January 2019 Logistics Management Magazine Issue
Seaports on West, East, and Gulf coasts are all poised to compete on one major imperative: investment in transformational technologies.
2019 Rate Outlook: Pressure Builds
Lift Trucks join the connected enterprise
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2019 Rate Outlook: Will this be the year rates skyrocket?
Join Logistics Management's Patrick Burnson as he hosts a panel of fuel, trade and logistics experts who share their insights on rate patterns across all major transport modes to help shippers prepare their freight transportation budget for the coming year.
Register Today!
2019 Rate Outlook: Pressure Builds
In 2019, the world economy will enter a third straight year of broad-based growth, but many...
2019 Transportation Management Systems (TMS) Market Update: Keeping pace with the times
The transportation management systems market is growing right along with the number of challenges...

The Logistics News that Shaped 2018
Every year at this time, group news editor Jeff Berman combs through the mountain of news that was...
Land O’Lakes lock in Texas-based capacity
Faced with the challenge of securing capacity in specific lanes, the iconic company broke with...